Small farmers risk exclusion from biofuels certification schemes

FAO report warns that certification schemes could become indirect trade barriers if not properly managed

A farmer harvests Jatropha fruit for biofuel production in Ivory Coast

26 February 2013, Rome - The way certification schemes for biofuels are structured makes it difficult for smallholder producers and many developing countries to participate in export markets, according to a new report from FAO.

The report, Biofuels and the Sustainability Challenge, finds that current certification schemes, which are voluntary and largely privately-operated, might exclude small-scale farmers because they are dominantly designed for large-scale agro-industry. Many certification schemes are data- or information-intensive and require costs and capacities that are often out of reach for most smallholders.

"As structured, these schemes would tend to favour big players and provide incentives for scaling up production to absorb certification costs," the report says.

But certification can have some positive impacts on business, including "improved efficiency within a supply chain ... decreased risk, higher transparency and increased awareness about problems in the supply chain."

Market access

At the same time, however, the schemes, " to the extent that they are established to control imports, can hinder trade and reduce market access - especially for developing countries with comparative advantages in business production, and which see in this industry a real opportunity for development and for overcoming rural poverty and high unemployment".

"Many developing countries express concern that certification schemes can become indirect trade barriers when not managed properly," the report continues.

For example, while it is easy for producers in industrialized countries to comply with the demand for education opportunities to be provided for employed farmers, it could be much more difficult for small-scale producers in developing countries.

Similarly, big companies routinely keep financial records needed for audits while smallholders tend to keep information in their heads on data such as yields, fertilizers and other inputs needed for Greenhouse Gas Emissions estimations.

"To increase certification uptake, governments and international organizations in consumer and producer countries should establish complementary mechanisms to create an enabling environment," the report suggests.

National legislation

"Such mechanisms could include national legislation, public procurement policies, tax incentives and tax relief and start-up grants. Financial institutions also have an important role to play to support and enable schemes."

One way to reduce costs for smallholders is to promote local inspection bodies, the report adds. "These involve lower costs for the producers, are better able to conduct spontaneous examinations and are generally better informed about on-site characteristics.

"There are positive, negative and mixed impacts of biofuel certification," the report concludes. "Environmental impacts for certification can bring positive benefits if they facilitate forest planning and inventory, silviculture, biodiversity protection and monitoring and compliance."

"Economic impacts can also be positive if certification can generate price premiums... for suppliers, ensure decent wages for workers and ensure market access. On the downside there are negative effects on smallholders who appear to be left out of the certification schemes."